Rethinking business and politics in Ethiopia: The role of EFFORT, the Endowment Fund for the Rehabilitation of Tigray

October 17, 2012

1 Introduction

This research report presents part of what we hope will be a wider study of economic development and private enterprise in Ethiopia. It explores the role of the so-called ‘endowment-owned companies’ in order to learn lessons about the nature and potential of the relationship between business and politics in Ethiopia. These endowments were originally established with resources donated on behalf of the various fronts of the incoming Ethiopian ruling party, and a number of senior EPRDF politicians are still closely involved in their corporate policy-making.

Since the 1990s, Ethiopia has seen the emergence of four such endowment conglomerates, each in one of its federated states and associated with one of the ruling Fronts: the Endowment Fund for the Rehabilitation of Tigray (EFFORT) in Tigray Region; Tiret or Endeavour in Amhara; Tumsa in Oromia; and Wendo in the Southern Nations, Nationalities and Peoples’ Regional State (SNNPRS). As seems often the case when business conglomerates across the world are known to have connections with powerful politicians, the activities, role and impact of these four groups of businesses have been the subject of much speculation and gossip. Even where there are strongly established local or international consensuses about the Ethiopian endowment-owned companies, these often turn out to be based on relatively limited empirical evidence, and to be driven by neoliberal economic assumptions.

This paper focuses on EFFORT, and attempts to document, review and extend the main elements of what is known about its operations and impact. The study is a contribution to the Africa Power and Politics Programme (APPP), of which one research stream re-examines and re-assesses the relationship between business and politics in Africa. We therefore situate our analysis in relation to APPP’s emerging concept of ‘developmental (neo)patrimonialism’ (see Kelsall and Booth et al., 2010; Booth and Golooba-Mutebi, 2011; Kelsall, 2011).

The remainder of this introductory section summarises this conceptual framework for rethinking the relationship between business and politics in Africa; it introduces our major conclusions in relation to Ethiopia; and offers some caveats on limitations and terminology. The following section elaborates the historical, socio-economic and ideological context for business and economic development in Ethiopia, and the conceptual framework provided by the ‘developmental state’. We then examine the endowment-owned companies, and EFFORT in particular. A discussion of the rationale, processes, capital, objectives and organisational structures on which EFFORT was established introduces a detailed account of the market position, activities, linkages and objectives of each of the companies in its portfolio. The section concludes with an account of the chronological trajectory of EFFORT’s evolution, and a discussion of emerging themes related to synergies, competition, management and development. For the sake of completeness, but without going into analytical detail, the report includes some very brief comments situating the three other regional endowment-owned business conglomerates, and other EPRDF-associated companies at national level, before concluding.

–For Full Report click Rethinking business and politics in Ethiopia